Värde Management, L.P. (“VMLP”) is the registered investment adviser in the broader Värde organization (“Värde” or the “Firm”), a global alternative investment firm. Värde was founded in 1993 and is headquartered in Minneapolis, Minnesota, with regional headquarters in London and Singapore. Värde also maintains additional offices in Asia Pacific, Europe and North America. The Firm is managed by a group of senior professionals, including sixteen partners: George G. Hicks, Marcia L. Page, Bradley P. Bauer, Ilfryn C. Carstairs, Jeremy D. Hedberg, Giuseppe Naglieri, Jonathan A. Fox, Scott T. Hartman, Andrew P. Lenk, David A. Marple, Francisco Milone, Timothy J. Mooney, Rick J. Noel, Brian C. Schmidt, Elena Lieskovska and Haseeb K. Malik (together, the “Principals”). The Principals, together with retired partners Gregory S. McMillan and Ali M. Haroon, own 100% of the Firm. Värde sponsors and manages a family of private investment funds (the “Private Funds”). The Private Funds are Värde’s only clients (i.e., there are presently no direct advisory clients other than the Private Funds). A related entity of VMLP generally acts as the general partner of each Private Fund, and VMLP is the investment manager of each Private Fund. Värde currently categorizes the Private Funds into two primary categories: “closed-end funds” and “evergreen funds.” The closed-end funds are structured in a “private equity” format, typically having a stated investment period and term. The evergreen funds do not have a defined investment period, but generally permit investors to make redemptions on a periodic basis. In addition, Värde from time to time forms Private Funds that are co-investment vehicles designed to participate in a particular investment or opportunity alongside other Private Funds. The terms of such co-investment vehicles, including permitted investments, fees and governance, are negotiated between Värde and the participating co-investors. The section titled “Methods of Analysis, Investment Strategies and Risk of Loss” (Item 8 below) includes additional disclosure related to co-investments. VMLP’s advisory services primarily consist of (i) investigating, identifying and evaluating investment opportunities; (ii) structuring, negotiating and making investments on behalf of the Private Funds; (iii) managing and monitoring the performance of such investments; and (iv) exiting such investments on behalf of the Private Funds. VMLP’s advisory services to each Private Fund are subject to the specific investment objectives and restrictions applicable to such Private Fund, as set forth in such Private Fund’s limited partnership agreement, confidential private placement memorandum and/or other governing documents (collectively, the “Offering Documents”). Investors and prospective investors in each Private Fund should refer to the Offering Documents of the applicable Private Fund for complete information regarding the investment objectives, investment restrictions and other information with respect to such Private Fund. In accordance with common industry practice, one or more of the Private Funds’ general partners enter into “side letters” or similar agreements with certain investors pursuant to which the general partner grants the investor specific rights, benefits or privileges that are not made generally available to other investors. These side letters or similar agreements generally are disclosed only to investors in the applicable Private Fund that have separately negotiated with Värde for the right to review such side letters or similar agreements or pursuant to a “most favored nations” provision in the relevant Private Fund governing documents. VMLP, as the sole SEC-registered investment adviser within the broader Värde organization, has investment discretion with regard to all Private Fund assets. As of December 31, 2018, Värde’s Regulatory Assets Under Management (as defined in Form ADV Part 1) are $18.98 billion. please register to get more info

The compensation each Private Fund pays Värde is set forth in each Private Fund’s Offering Documents. Värde is generally paid a management fee by each Private Fund monthly in arrears or otherwise in accordance with the Private Fund’s Offering Documents. Värde is authorized under the Private Funds’ Offering Documents to charge and deduct management fees directly from the assets of the Private Funds. Please refer to the Offering Documents of each applicable Private Fund for complete information on the fees and compensation payable with respect to such Private Fund. The fee percentage and/or the base upon which the fee is calculated may vary with the size of the Private Fund and may also vary over the life of the Private Fund, as negotiated and determined at the time the Private Fund is established and as set forth in its Offering Documents. Management fees, performance-based fees and incentive allocations are sometimes waived or reduced with respect to investments in the Private Funds by Värde and/or its related persons. Värde reserves the right to waive, reduce or defer any compensation or allocations payable to it by a Private Fund, including with respect to certain participants in such Private Fund, at any time it deems appropriate in its sole discretion. In addition, the Private Funds (directly or indirectly) may engage Värde or its affiliates to provide asset management services or country-specific management or service functions. Värde and/or its affiliates will retain the benefit of the fees paid for such services to the extent set forth in each Private Fund’s Offering Documents. The section titled “Other Financial Industry Activities and Affiliations” (Item 10 below) includes additional details regarding the services that may be provided. Each Private Fund will pay or reimburse Värde for certain organizational, operational and other permissible expenses as described in the Offering Documents for each Private Fund. These permissible expenses may vary among Private Funds, but the expenses borne by each Private Fund generally include, without limitation: (i) organizational and offering expenses of the Private Fund (including, without limitation, organizational and incorporation expenses of the Private Fund and its general partner, legal and accounting fees incurred in connection therewith, expenses incurred in connection with the preparation of the Offering Documents and other documentation related to the organization and offering of the Private Fund and its general partner (including, without limitation, prospectuses, diligence responses, disclosure documents, legal opinions, side letters and similar agreements), expenses incurred to comply with any law or regulation related to the business and activities of the Private Fund and its general partner, and all other expenses with respect to offering interests in the Private Fund (including, without limitation, filing fees and expenses, Travel-Related Expenses (as defined below) (including, without limitation, meetings with prospective investors) and similar costs)); (ii) expenses incurred in connection with the Private Fund’s trading and the evaluation, sourcing, structuring, organizing, acquisition, disposition, operating, holding, valuing, carrying, financing, refinancing, discovery, investigation, development, execution or management of investments (whether or not consummated) and related transactions (including follow-on investments), including, without limitation, the fees, costs and expenses of investment banks, legal counsel, tax advisors, brokers, broker-dealers, finders, asset managers, developers, joint venture partners, consultants, third- party research, information services and other third-party fees, work-out specialists, Travel- Related Expenses, any broken deal expenses, reverse break-up and termination fees, valuation services, software, publication subscriptions, the cost to attend conferences (including Travel- Related Expenses), business entertainment, printing and similar costs of the Firm and its employees and agents; (iii) all sales and brokerage commissions, clearance charges, underwriting commissions and discounts and other normal charges, costs and expenses incidental to the purchase, sale or other disposition of the Private Fund’s investments; (iv) expenses incurred in connection with the maintenance of the Private Fund’s books and records and developing, licensing, implementing, maintaining or upgrading any web portal, extranet tools, computer software or other administrative or reporting tools (including subscription-based services) for the benefit of the Private Fund or the Private Fund investors, and any and all fees, costs and expenses incurred in connection with the preparation, distribution or filing of Private Fund- related and investment-related financial statements or other reports, tax returns, tax estimates, Schedule K-1s (or similar schedules) or any other administrative, compliance, regulatory or other Private Fund-related reporting or filing obligations, including, without limitation, expenses related to the maintenance of an electronic reporting portal for Private Fund investors, and the preparation of other reports by third-party service providers; (v) professional and administration fees and expenses (which, for the avoidance of doubt, may include, without limitation, (A) fees and expenses paid for services received from companies owned by Värde, its affiliates or other Private Funds, (B) consulting and retainer fees and other compensation and expenses of dedicated operating consultants and senior advisors retained to conduct due diligence, provide industry analysis and provide other services (including, without limitation, human resources, finance, commercial, information technology support and operational support services)) with respect to the Private Funds or any of their investments, and (C) amounts paid to other persons and entities acting in a similar capacity, in each case whether or not such persons or entities are engaged by Värde, the Private Funds and/or any affiliate of the Private Funds in a dedicated or exclusive capacity and including fixed fees (such as retainers) and/or performance-based fees and allocations with respect to investments, in each case, whether in the form of cash, options, warrants, stock or otherwise); (vi) compensation and expenses of any other consultants, including, without limitation, (A) environmental, social, governance, insurance, sourcing, operating, research, industry expert and/or subject matter consultants, and other persons and entities acting in a similar capacity, in each case whether or not such persons or entities are engaged by Värde, the Private Funds and/or any affiliate of the Private Funds in a dedicated or exclusive capacity, and (B) third-party consultants retained by Värde on a full-time or part-time basis primarily to provide manufacturing, sales, marketing, legal, technology, human resources, acquisition integration/rationalization and/or other operations services or similar services to the Private Funds or any investment or prospective investment, in each case including fixed fees (such as retainers) and/or performance-based fees and allocations, whether in the form of cash, options, warrants, stock, incentive equity, other stock awards or otherwise; (vii) all expenses of the transfer, receipt, safekeeping, servicing and accounting for the Private Fund’s investments, cash and other property, including all charges of depositories (including any depositary appointed pursuant to the European Union Directive on Alternative Investment Fund Managers (2011/61/EU) (the “AIFMD”) or any law, rule or regulation relating to the implementation thereof in any relevant jurisdiction), any Swiss representative and paying agent (pursuant to the Swiss Collective Investment Schemes Act (as amended) and the implementation thereof) or similar agents in other jurisdictions, custodians, trustees, asset managers, title companies and other agents, if any; (viii) all charges for services and expenses of legal counsel (including secondees), third-party administrators (if any), outside tax advisors and accountants, and independent auditors in connection with services to the Private Fund (including, without limitation, the “tax matters partner’s” or “partnership representative’s” representation of the Private Fund or the Private Fund investors, as well as responses to questions and inquiries and fulfillment of requests regarding investments, operations and compliance of the Private Fund); (ix) any and all expenses (including legal fees and expenses of outside counsel) incurred to register under or comply with any law, rule or regulation related to the activities of the Private Fund or its general partner (including regulatory and compliance expenses of the Private Fund and the Firm, such as Form PF, all expenses and costs arising pursuant to filings associated with the AIFMD and related European Economic Area national private placement laws, or any law, rule or regulation relating to the implementation thereof in any relevant jurisdiction or similar filings required in other jurisdictions or by other laws, rules or regulations, including those resulting from the United Kingdom ceasing to be part of the European Union and applicable anti- money laundering procedures, laws and/or regulations and know-your-customer procedures, laws and/or regulations, or expenses otherwise related to the registration of Värde, a Private Fund or its general partner under applicable law in connection with the offering of interests in the Private Fund or clearing or distributing subscriptions of the Private Fund through a local broker- dealer or agent under applicable law); (x) such nonrecurring expenses as may arise, including the costs of actual, threatened or otherwise anticipated litigation, actions, suits, proceedings, mediation, arbitration or other dispute resolution process as well as any governmental inquiry, investigation or proceeding to which the Private Fund is a related party or is otherwise involved, including judgments, fines, other awards and settlements paid in connection therewith, and the expenses that the Private Fund may incur as a result of any indemnification obligations or guarantees, including its legal obligation to provide indemnification under the Offering Documents (including any fees, costs and expenses incurred in connection with indemnifying any investor or other person or entity pursuant to the Offering Documents and advancing fees, costs and expenses incurred by any such person or entity in defense or settlement of any claim that is subject to a right of indemnification pursuant to the Offering Documents), the management agreement with VMLP or any other contractual arrangements; (xi) any and all taxes and governmental fees levied against or payable by, or with respect to, the Private Fund, its investments and any special purpose vehicles, to any U.S. federal, state or other governmental authority, domestic or non-U.S., including real estate, stamp or other transfer taxes, including in connection with any tax audit, investigation or review, or any settlement thereof, and, in the discretion of the Firm, certain withholding taxes; (xii) expenses related to complying with the U.S. Foreign Account Tax Compliance Act, the Common Reporting Standard issued by the Organisation for Economic Cooperation and Development, or similar legislation, regulations or guidance enacted in any other jurisdiction, which seeks to implement equivalent tax reporting and/or withholding tax regimes as well as any intergovernmental agreements and other laws of other jurisdictions with similar effect; (xiii) insurance premiums or expenses incurred in connection with the activities of the Private Fund, including, without limitation, general liability, errors, omissions, fidelity, crime, general partner liability, fiduciary, directors’ and officers’ liability, cybersecurity and other coverage; (xiv) expenses incurred in connection with the winding up, dissolution or liquidation of the Private Fund and its related entities, including the Private Fund’s general partner; (xv) management fees payable to the Firm; (xvi) expenses relating to defaults by the Private Fund investors in the payment of any capital contributions; (xvii) expenses incurred in connection with any restructuring or amendments to the constituent documents of the Private Fund and related entities, including, without limitation, the Private Fund’s general partner; (xiii) expenses incurred in connection with any valuation and appraisal of the assets of the Private Fund (including third-party valuation firms and software); (xix) expenses incurred in connection with the formation, governance and maintenance of alternative investment vehicles to the extent permitted under the Offering Documents (including expenses in connection with raising and putting in place co-investment vehicles where desirable for accomplishing an investment, to the extent not borne by the applicable co-investors and/or co-investment vehicle); (xx) expenses incurred in connection with the formation and maintenance of any feeder vehicles or special purpose vehicles; (xxi) expenses incurred in connection with co-investments (whether or not consummated) that are not borne by co- investors; (xxii) expenses incurred in connection with distributions to the Private Fund investors; (xxiii) expenses incurred in connection with any meetings of the Private Fund investors or the Private Fund’s advisory committee, if applicable, (including, without limitation, Travel-Related Expenses of the Firm and its representatives and meal and lodging expenses of the Private Fund investors, in each case, incurred in connection with attending such meetings); (xxiv) out-of- pocket expenses incurred by members (including any non-voting members or persons with observer rights) of the Private Fund’s advisory committee, if applicable, and the member’s designees in connection with attending advisory committee meetings or otherwise fulfilling their duties pursuant to the Offering Documents, including, without limitation, Travel-Related Expenses incurred in connection with attending advisory committee meetings; (xxv) expenses incurred in connection with compliance with the Offering Documents, any side letters or similar agreements and any “most favored nations” election processes; (xxvi) extraordinary expenses under U.S. Generally Accepted Accounting Principles (“GAAP”); (xxvii) fees paid to directors of the Private Funds and expenses associated with meetings of such directors; (xxiii) any placement fees and expenses; (xxix) amounts paid by the Private Fund for or resulting from short sales and other derivative contracts or instruments, including those entered into for hedging purposes; (xxx) any principal, interest on (including margin interest expense) and fees and expenses arising out of, in connection with or incident to, borrowings and indebtedness by or on behalf of the Private Fund (including any credit facility) or in connection with any Private Fund activities and any transactions having a similar leveraging effect (including, without limitation, the fees, costs and expenses incurred in arranging financing and indebtedness with respect to Private Fund activities, including, without limitation, obtaining lines of credit, loan commitments and letters of credit for the account of the Private Fund and in guaranteeing the obligations of any portfolio investments or any assets thereof); (xxxi) unreimbursed costs and expenses incurred in connection with any transfer or proposed transfer by any Private Fund investor; (xxxii) any expenses related to protecting the confidential or non-public nature of any information or data; (xxxiii) any expenses related to printing, communications, marketing and publicity; (xxxiv) any third-party experts, including independent appraisers, in connection with the Private Fund considering, making, holding or selling an investment that is held or to be held in the same entity as one or more other Private Funds; and (xxxv) any other expenses approved by the Private Fund’s advisory committee or investors, or otherwise set forth in the Private Fund’s Offering Documents. “Travel-Related Expenses” include, without limitation, costs related to transportation (including the use of air transportation not to exceed commercial- equivalent first class (or comparable tier) airfare), lodging and accommodations, meals and entertainment. To the extent that any of the foregoing expenses relate to the operations of more than one Private Fund, Värde will, unless otherwise set forth in the Offering Documents of such Private Funds, allocate such expenses based on a good faith determination of the relative benefits of such expenses to all Private Funds benefiting from such expenses. From time to time, Värde pays for certain of these expenses out of its own assets and seeks reimbursement from the Private Funds. The section titled “Brokerage Practices” (Item 12 below) describes the factors Värde considers in selecting or recommending broker-dealers and determining the reasonableness of their compensation. The section titled “Client Referrals and Other Compensation” (Item 14 below) describes certain management, monitoring, consulting, directors’ or other fees that Värde may receive from portfolio investments held by Private Funds. Certain of the fees payable to Värde are based on the value and performance of the assets held in the Private Funds. Värde has adopted and implemented a Valuation Policy that governs the valuation of the securities and other assets held by the Private Funds. The Valuation Policy generally provides that liquid investments will be valued at readily ascertainable market values. In the case of assets that lack such a readily ascertainable market value, the Valuation Policy requires Värde to determine a value for these investments in accordance with the terms of the policy. Värde faces a conflict of interest in valuing assets that lack a readily ascertainable market value, because their value can impact certain of the fees payable to Värde and its performance returns. With respect to these investments, Värde uses various valuation methodologies based on the nature of the assets. These methodologies are inherently subjective and capable of producing a range of values that may be considered reasonable to different parties and that may be different than valuations done by others applying their own judgment at different or similar dates. There is no assurance that the valuations determined by Värde represent values that can or will be realized in a sale or exchange of investments with an independent third party. Värde documents its valuation decisions and reviews them on a periodic basis. Värde has a Valuation Committee that is responsible for overseeing the Valuation Policy and the related procedures. The Valuation Committee meets no less than quarterly and on an as-needed basis. On an annual basis, Värde’s valuations are reviewed in connection with each Private Fund’s independent external financial statement audit. please register to get more info

The general partner of each Private Fund is a Värde-affiliated entity, and the calculation and role of the performance compensation paid by each Private Fund to its general partner, if any, is described in the Private Fund’s Offering Documents. Performance-based fee and allocation arrangements theoretically create an incentive for Värde to make more speculative investments in the assets purchased for a Private Fund than it might otherwise make in order to increase the likelihood that Värde would be paid incentive fees or receive incentive allocations. As a general matter, these conflicts are mitigated by provisions requiring Värde (in its capacity as general partner) to invest at least 1% of the Private Fund investors’ capital commitments in each Private Fund (other than certain co-investment vehicles), as well as restrictions on the distribution of any incentive compensation relating to the closed-end Private Funds until after the return of all principal to investors and payment to them of any preferred return. These conflicts are further mitigated by Värde’s suitability obligation with respect to Private Fund investments and its disciplined investment process. Different Private Funds have different incentive compensation arrangements. For example, the incentive compensation for the evergreen funds is generally payable annually, while the incentive compensation for the closed-end funds is generally paid only after investors have received distributions equal to their invested capital and a preferred return. This may create a potential conflict of interest relating to the allocation of investment opportunities and the time and attention of Värde personnel to the extent Värde (in its capacity as general partner) can collect the incentive compensation sooner (or collect higher incentive compensation) from one Private Fund than it can from the others. Värde believes that this conflict is mitigated by its investment allocation procedures (as described in the section titled “Brokerage Practices” (Item 12 below)) and its disciplined investment process. please register to get more info

Värde’s only clients are the Private Funds (i.e., there are presently no direct advisory clients other than the Private Funds). Investors in the Private Funds include various global institutional investors (e.g., trusts, endowments, foundations, pensions, corporations and other types of entities, including private funds-of-funds) as well as high net worth individuals that, in each case, meet the regulatory and other requirements under which the Private Fund operates and desire to invest in accordance with the Private Funds’ investment objectives. Interests in the Private Funds are offered in private placements under the U.S. Securities Act of 1933 (as amended, the “Securities Act”). As a result, Värde generally offers limited partner (or equivalent) interests in the Private Funds to a limited number of “accredited investors” as defined in Regulation D under the Securities Act, and exclusively to “qualified purchasers” as defined in Section 2(a)(51) of the U.S. Investment Company Act of 1940 (as amended, the “1940 Act”) due to the Private Funds’ exempt status from registration as investment companies. Employees who qualify as “knowledgeable employees” under Rule 3c-5 of the 1940 Act are also permitted to invest (directly or indirectly) in the Private Funds. Investors and prospective investors in each Private Fund should refer to the Offering Documents of such Private Fund for complete information on minimum investment requirements for participation in such Private Fund. In connection with the formation and management of a Private Fund, Värde may form certain related entities for such Private Fund. Värde may establish vehicles to address tax, legal or regulatory issues or requirements of certain investors in such Private Fund or for other purposes. Värde may also form parallel funds to invest alongside a Private Fund. In addition, Värde may form alternative investment vehicles, holding companies or other special purpose vehicles for the purpose of facilitating certain investments by one or more Private Funds. Please refer to the Offering Documents of the applicable Private Fund for complete details regarding entities that Värde may form in connection with the formation and management of such Private Fund. please register to get more info

Värde’s investing philosophy rests in applying the following set of core principles to opportunities across the Firm’s investing platform:  Search opportunistically for complex situations in less efficient markets where there is a favorable balance in the supply of, and demand for, capital;  Seek to invest at a price that allows Värde to unlock or create value, with a strong focus on both discount to fundamental value and downside protection;  Focus on value drivers, the path to unlock value and potential exit strategies, which often require activism or active asset management;  Assess risk/reward holistically, not looking only for the best value in local markets, but comparing it against the global opportunity set across the Värde platform; and  Approach investment opportunities with flexible capital that allows Värde to operate across both illiquid and traded/liquid assets and securities as well as both secondary and primary markets.

Significant Investment Strategies Details regarding the investment and liquidity profile pursued by each Private Fund, as well as additional information regarding Värde’s investment strategies and activities, are set forth in the Offering Documents related to each Private Fund. Subject to the investment parameters set forth in each Private Fund’s Offering Documents, Värde pursues investment strategies across geographies in a broad range of assets. Värde’s investing activity is conducted by five global investment teams:  Corporate and Traded Credit: This team pursues investments in debt and equity instruments issued by corporate entities as well as government-issued debt.  Mortgages: This team pursues investments in certain real estate mortgages, either directly or indirectly via securities that are backed by underlying real estate assets. This segment also includes investments in companies that originate and/or service such mortgages.  Financial Services: This team pursues investments in the financial services sector, including in companies that originate and/or service commercial and consumer credits, including credit cards, personal loans and equipment finance, as well as direct investments in those credits.  Real Estate: This team pursues investments in real estate assets or companies involved in developing, owning and/or managing property and/or originating certain real estate loans, investments that arise from lending to entities that develop or manage real property assets, and investments in loans and securities secured by certain real estate assets.  Real Assets and Infrastructure: This team pursues investments in real assets (other than real estate), including loans secured by assets associated with the energy and transportation sectors as well as investments in companies that operate in those sectors, and investments in companies that operate in the infrastructure sector. General Methods of Analysis Värde invests across a broad spectrum of the global markets, and therefore individual investment opportunities will require varying levels of review and customized processes depending upon the markets and participants involved. Värde performs extensive quantitative and qualitative fundamental research to determine the suitability of a particular investment on both its own merits as well as its “fit” in terms of industry or macro theme. In typical situations, a detailed financial model for use in assessing valuation is developed. In conjunction with the financial model, investment professionals generally perform an analysis of comparable valuations in the liquid and illiquid markets, a discounted cash flow analysis, a reorganization analysis and/or liquidation analysis, and an analysis of potential returns for the investment as well as other types of financial analyses in each case as warranted. At the completion of a favorable due diligence process, Värde identifies the price range at which to pursue the investment opportunity. Material Risks The material risks presented by the strategies and investments pursued by Värde are set forth below. Additional information is contained in the Offering Documents related to each Private Fund. This Brochure does not purport to contain a complete disclosure of all risks that may be relevant to a prospective investor in a Private Fund. Investing involves risk of loss that an investor should be prepared to bear. Investments by Värde involve significant risks. There can be no assurance that Värde will meet the investment objectives of any particular Private Fund or otherwise be able to carry out its investment strategy successfully. Changes and Fluctuations in Financial Markets: The Private Funds may be materially affected by conditions in the financial markets and economic conditions throughout the world. These factors are outside Värde’s control and may adversely affect the liquidity and value of the Private Funds’ investments, and Värde may fail to, or may not be able to, manage their exposure to these conditions. In these circumstances, the financial performance of the Private Funds may be negatively impacted and investors may incur material losses. In addition, a negative impact on economic fundamentals and consumer and business confidence would likely increase market volatility and reduce liquidity, both of which could have a material adverse effect on the performance of the Private Funds and these or similar events may affect the ability of Värde to execute its investment strategies. At times, markets may experience extreme levels of stress and dislocation. Such market turbulence may have a material adverse effect on the Private Funds’ investments and, in addition, the response by governments, central banks and other policy makers to financial crisis situations may adversely affect Värde’s ability to effectively execute its investment strategy. Similarly, government intervention may distort market prices or result in other unanticipated consequences that could adversely affect the performance of the Private Funds. Highly Volatile Markets: The prices of instruments in which the Private Funds may invest can be highly volatile. The price of equity, debt and other instruments that Värde may pursue are influenced by numerous factors including, but not limited to, interest rates, currency rates, default rates, governmental policies and political and economic events (both domestic and global). Moreover, political or economic crises or other events may occur that can be highly disruptive to the markets in which Värde may invest. In addition, governments from time to time intervene (directly and by regulation) and this intervention may adversely affect the performance of the Private Funds and Värde’s investment activities. The Private Funds are also subject to the risk of a temporary or permanent failure of the exchanges and other markets used by the Private Funds in connection with their investment activities. Sustained market turmoil and periods of heightened market volatility may make it more difficult to produce positive results and there can be no assurance that Värde’s strategies will be successful in such markets. Changes to the Regulatory Framework: Many of the investments and investment strategies employed by Värde are subject to numerous laws and regulations in many jurisdictions. Material changes to, or interpretations of, such laws and regulations could have a material adverse effect on the financial performance of the Private Funds and undermine Värde’s ability to execute its investment strategy. Execution Risks: In order to seek positive returns in global markets, Värde’s trading and investment activities for the Private Funds involve multiple instruments, multiple brokers and counterparties and multiple strategies. As a result, the execution of the trading and investment strategies employed by Värde may often require rapid execution of investments, complex transactions, difficult-to-execute transactions, use of negotiated terms with counterparties such as in the use of derivatives and the execution of transactions involving less common or novel instruments. In each case, Värde seeks best execution and has trained execution and operational staff devoted to executing, settling and clearing investments. However, in light of the volumes, velocity, complexity and global diversity involved, some errors and miscommunications with brokers and counterparties may occur and could result in losses to the Private Funds. In these circumstances, Värde will evaluate the merits of potential claims for damage against brokers and counterparties who may be at fault and, to the extent practicable, will seek to recover losses from those parties. In its sole discretion, Värde may choose to forego pursuing claims against brokers and counterparties on behalf of the Private Funds for any reason, including, but not limited to, the cost of pursuing claims relative to the likely amount of any recovery and the maintenance of its business relationships with brokers and counterparties. In addition, Värde’s own execution and operational staff may be solely or partly responsible for errors in placing, processing, documenting and settling transactions that result in losses to the Private Funds. See “Investment and Allocation Errors” in the section titled “Brokerage Practices” (Item 12 below) for details on reimbursement for errors made by Värde personnel. Market Disruptions: The Private Funds may incur losses in the event of market disruptions and other extraordinary events in which historical pricing relationships (on which Värde bases a number of its trading positions) become materially distorted. The risk of loss from pricing distortions is compounded by the fact that in disrupted markets many positions become illiquid, making it difficult or impossible to close out positions against which the markets are moving. The availability of credit is typically reduced during market disruptions. Market disruptions caused by unexpected political, military or terrorist events may from time to time cause dramatic losses for the Private Funds and such events can result in otherwise historically low-risk strategies performing with unprecedented volatility and risk. Debt Generally: The Private Funds may invest in a variety of debt investments. Debt investments are subject to credit and interest rate risks. “Credit risk” refers to the likelihood that a borrower will default in the payment of principal and/or interest on an instrument. Financial strength and solvency of a borrower are the primary factors influencing credit risk. In addition, the lack or inadequacy of collateral or credit enhancement for a debt instrument may affect its credit risk. Credit risk may change over the life of an instrument and debt obligations that are rated by rating agencies are often reviewed and may be subject to downgrade. “Interest rate risk” refers to the risks associated with market changes in interest rates. Interest rate changes may affect the value of a debt instrument indirectly (especially in the case of fixed-rate debt securities) and directly (especially in the case of debt instruments whose rates are adjustable). In general, rising interest rates will negatively impact the price of a fixed rate debt instrument and falling interest rates will have a positive effect on price. Adjustable rate instruments also react to interest rate changes in a similar manner although generally to a lesser degree (depending, however, on the characteristics of the reset terms, including, without limitation, the index chosen, frequency of reset and reset caps or floors, among other factors). Interest rate sensitivity is generally more pronounced and less predictable in investments with uncertain payment or prepayment schedules. In addition, interest rate increases generally will increase the interest carrying costs to the Private Funds of borrowed securities and leveraged investments. Distressed Investments: The strategies executed by the Private Funds may involve purchasing securities and other obligations of companies that are experiencing significant financial or business distress, including companies involved in bankruptcy or other reorganization and liquidation proceedings. Many of these securities and obligations typically remain unpaid unless and until the company reorganizes and/or emerges from bankruptcy proceedings. In addition, it frequently may be difficult to obtain information as to the conditions of these investments. The market prices of these investments are also subject to abrupt and erratic market movements and above average price volatility, and the spread between the bid and ask prices of such investments may be greater than normally expected. Although such investments may result in significant returns, they can involve a substantial degree of risk and may not show any return for a considerable period of time, if at all. Distressed Debt: Investments in distressed debt are subject to the significant risk of a borrower’s inability to meet principal and interest payments on the obligations (credit risk) and also may be subject to price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the borrower and general market liquidity (market risk). Distressed debt may react to developments affecting market and credit risk more than non-distressed debt. A wide variety of other considerations exist, including, for example, the possibility of litigation between the participants in a reorganization or liquidation proceeding or a requirement to obtain mandatory or discretionary consents from various governmental authorities or others. The uncertainties inherent in evaluating distressed debt may be increased by legal and practical considerations that limit the access of Värde to reliable and timely information concerning material developments affecting a company, or that cause lengthy delays in the completion of the liquidation or reorganization proceedings. The level of analytical sophistication, both financial and legal, necessary for successful investment in companies experiencing significant business and financial distress is unusually high. There is no assurance that Värde will correctly evaluate the nature and magnitude of the various factors that could affect the prospects for a successful reorganization or similar action. In any reorganization or liquidation proceeding relating to a company in which a Private Fund invests, the Private Fund may lose its entire investment or may be required to accept cash or securities with a value less than the original investment. Credit Risk; Collateral: The Private Funds’ investments may be secured by collateral. If securing first priority liens, collateral generally cannot be pledged, lent, re-hypothecated or otherwise re-used by the borrower. The value of this collateral may initially exceed the principal amount of such investments, but there can be no assurance that the liquidation of any such collateral would satisfy the borrower’s obligation in the event of non-payment, or that such collateral could be readily liquidated. In addition, in the event of bankruptcy of a borrower, the Private Funds could experience delays or limitations with respect to their ability to realize the benefits of the collateral securing an investment. Under certain circumstances, collateral securing an investment may be released without the consent of the Private Funds. Moreover, the Private Funds’ security interest (with respect to investments in secured debt) may be unperfected or unexpectedly subordinated for a variety of reasons, including, without limitation, the failure to make required filings by lenders and, as a result, the Private Funds may not have priority over other creditors as anticipated. First priority lien investments made by the Private Funds may, in certain cases, provide a first priority lien over some, but not all, of the assets of the relevant borrower. The Private Funds may also invest in junior lien debt, unsecured debt, marketable and non-marketable common and preferred equity securities and other unsecured investments that involve a higher degree of risk than senior first- lien secured debt investments. Furthermore, a Private Fund’s right to payment and its security interest, if any, may be subordinated to the payment rights and security interests of senior lenders (with respect to some or all of the assets of a portfolio investment). The ability of the borrower to repay the principal and/or accumulated interest of an investment may be dependent upon a liquidity event or the long-term success of the borrower, the occurrence of which is uncertain. In addition, companies in which the Private Funds invest could present a high degree of business and credit risk. Companies in which the Private Funds invest could deteriorate as a result of, among other factors, an adverse development in their businesses, a change in the competitive environment or the continuation or worsening of the current (or any future) economic and financial market downturns and dislocations. As a result, companies that the Private Funds expected to be stable or improve may operate at a loss or have significant variations in operating results, may require substantial additional capital to support their operations or maintain their competitive position, or may otherwise be in a weak financial condition or be experiencing financial distress. The terms of derivative arrangements entered into by the Private Funds may provide that related collateral given to, or received by, the Private Funds may be pledged, lent, re-hypothecated or otherwise re-used by the collateral taker for its own purposes. If collateral received by the Private Funds is reinvested or otherwise re-used, the Private Funds are exposed to a heightened risk of loss on that investment. Should such a loss occur, the value of the collateral will be reduced and the Private Funds will have less protection if the counterparty defaults. Similarly, if the counterparty reinvests or otherwise re-uses collateral received from the Private Funds and suffers a loss as a result, it may not be in a position to return that collateral to the Private Funds should the relevant transaction complete, be unwound or otherwise terminate, and the Private Funds are exposed to the risk of loss of the amount of collateral provided to the counterparty. Senior Secured Loans: Senior secured loans acquired by the Private Funds are generally rated below investment grade or may be unrated. As a result, the risks associated with senior secured loans are similar to the risks of unrated or below investment grade fixed income instruments, although senior secured loans are senior and secured in contrast to other below investment grade fixed income instruments, which are often subordinated or unsecured. Investment in senior secured loans rated below investment grade is considered speculative because of the credit risk of their issuers. Such companies are more likely than investment grade issuers to default on their payments of interest and principal owed to the Private Funds, and such defaults could have a materially adverse effect on the Private Funds’ performance. An economic downturn would generally lead to a higher non-payment rate, and a senior secured loan may lose significant market value before a default occurs. Moreover, there is a risk that the collateral securing such loans may decrease in value over time, may be difficult to sell in a timely manner, may be difficult to appraise and may fluctuate in value based upon the success of the business and market conditions, including as a result of the inability of the borrower to raise additional capital, and, in some circumstances, the Private Funds’ liens could be subordinated to claims of other creditors. Consequently, the fact that a loan is secured does not guarantee that the Private Funds will receive principal and interest payments according to the loan’s terms, or at all, or that the Private Funds will be able to collect on the loan should it be forced to enforce its remedies. There may be less readily available and reliable information about most senior secured loans than is the case for many other types of securities, including securities issued in transactions registered under the Securities Act or registered under the U.S. Securities Exchange Act of 1934, as amended. As a result, Värde will rely primarily on its own evaluation of a borrower’s credit quality rather than on any available independent sources. Therefore, the Private Funds will be particularly dependent on the analytical abilities of the Firm. Subordinated Loans or Securities: Certain of the Private Funds’ investments may consist of loans or securities, or interests in pools of loans or securities that, in either case, are subordinated or may be subordinated in right of payment and ranked junior to other securities issued by, or loans made to, obligors. If an obligor experiences financial difficulty, holders of its more senior securities or loans will be entitled to payments in priority to the Private Funds. Some of the Private Funds’ asset-backed investments may also have structural features that divert payments of interest and/or principal to more senior classes of loans or securities backed by the same assets when loss rates or delinquency exceeds certain levels. This may interrupt the income the Private Funds receive from investments, which may lead to the Private Funds having less income to allocate or distribute to the investors. In addition, many of the obligors are highly leveraged and many of the Private Funds’ investments may be in securities or loans which are unrated or rated below investment grade. Such investments are subject to additional risks, including an increased risk of default during periods of economic downturn, the possibility that the obligor may not be able to meet its debt payments and limited secondary market support, among other risks. Mezzanine Investments: The Private Funds may make mezzanine investments, which may be unsecured and made in companies whose capital structures have significant indebtedness ranking ahead of the investments, all or a significant portion of which may be secured. While the investments may benefit from the same or similar financial and other covenants as those enjoyed by the indebtedness ranking ahead of the investments and may benefit from cross-default provisions and security over the assets of the issuer, some or all of such terms may not apply to particular investments. Moreover, the ability of the Private Funds to influence a borrower’s affairs, especially during periods of financial distress or following insolvency, is likely to be substantially less than that of senior creditors. Mezzanine investments are subject to various risks that may be applicable to other types of investments as well, including, without limitation: (i) a subsequent characterization of an investment as a “fraudulent conveyance”; (ii) the recovery as a “preference” of liens perfected or payments made on account of a debt in the 90 days before a bankruptcy filing; (iii) equitable subordination claims by other creditors; (iv) so-called “lender liability” claims by the issuer of the obligations; and (v) environmental liabilities that may arise with respect to collateral securing the obligations. Convertible Securities: Convertible securities are bonds, debentures, notes, preferred equity or other securities that may be converted into, or exchanged for, a specified amount of common equity of the same or different issuer within a particular period of time at a specified price or formula. A convertible security entitles its holder to receive interest that is generally paid or accrued on debt or a dividend that is paid or accrued on preferred equity until the convertible security matures or is redeemed, converted or exchanged. Convertible securities have unique investment characteristics in that they generally (i) have higher yields than common equity, but lower yields than comparable non-convertible securities, (ii) are less subject to fluctuation in value than the underlying common equity due to their fixed income characteristics and (iii) provide the potential for capital appreciation if the market price of the underlying common equity increases. The value of a convertible security is a function of its “investment value” (determined by its yield in comparison with the yields of other securities of comparable maturity and quality that do not have a conversion privilege) and its “conversion value” (the security’s market value, if converted into the underlying common equity). The investment value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors may also have an effect on the convertible security’s investment value. The conversion value of a convertible security is determined by the market price of the underlying common equity. If the conversion value is low relative to the investment value, the price of the convertible security is governed principally by its investment value. To the extent the market price of the underlying common equity approaches or exceeds the conversion price, the price of the convertible security will be increasingly influenced by its conversion value. A convertible security generally will sell at a premium over its conversion value by the extent to which investors place value on the right to acquire the underlying common equity while holding a fixed income security. Generally, the amount of the premium decreases as the convertible security approaches maturity. A convertible security may be subject to redemption at the option of the issuer at a price established in the convertible security’s governing instrument or other document. If a convertible security held by the Private Funds is called for redemption, the Private Funds will be required to permit the issuer to redeem the security, convert it into the underlying common equity or sell it to a third party. Any of these actions could have an adverse effect on the Private Funds’ ability to achieve their investment objectives. Loan Origination: Värde may originate loans on behalf of the Private Funds. In making loans, the Private Funds will compete with a broad spectrum of lenders, some of which may be willing to lend money on terms that are more competitive (from a borrower’s standpoint) than the Private Funds. Increased competition for, or a diminution in the available supply of, qualifying loans may result in lower yields on such loans, which could reduce returns to the Private Funds. Zero Coupon and Payment-In-Kind (“PIK”) Bonds: Because investors in zero coupon or PIK bonds receive no cash prior to the maturity or cash payment date applicable thereto, an investment in such securities generally has a greater potential for a complete loss of principal compared to an investment in debt securities that makes periodic interest payments. Such investments are more vulnerable to the creditworthiness of the issuer and any other parties upon which performance relies. Early Prepayment: Certain debt that the Private Funds may invest in, such as senior debt, may be repaid early, so that the actual maturity of such investments is shorter than their stated final maturity calculated solely on the basis of the stated life and repayment schedule. Generally voluntary prepayments are permitted and the timing of prepayments cannot be predicted with any accuracy. The degree to which borrowers prepay debt, whether as a contractual requirement or at their election, may be affected by general business conditions, market interest rates, the borrower’s financial condition and competitive conditions among lenders. Prepayments are likely to be made during any period of declining interest rates. Such prepayments may result in the Private Funds receiving a lower than anticipated yield on such investments. Loan Amortizations: The Private Funds may invest in loans that have limited mandatory amortization requirements. While these loans may obligate an issuer to repay the loan out of asset sale proceeds, annual excess cash flow or similar non-recurring events, repayment requirements may be subject to substantial limitations that would allow an issuer to retain such asset sale proceeds or cash flow, thereby extending the expected weighted average life of the investment. In addition, a low level of amortization of any debt over the life of the investment may increase the risk that the borrower will not be able to repay or refinance the loans held by the Private Funds when it matures. Debtor-In-Possession (“DIP”) Loans: The Private Funds may invest in DIP loans. These loans involve a fundamental credit risk based on the debtor’s ability to make principal and interest payments and the inherent risks of the bankruptcy process. DIP loans are subject to a court approval process in which parties-in-interest may be heard but there can be no assurance that the Private Funds would be successful in obtaining favorable results. If the calculations of the Firm as to the outcome or timing of a reorganization are inaccurate, a company that has filed for bankruptcy may not be able to make payments on a DIP loan on time or at all. In addition, DIP loans may be privately negotiated transactions that have individualized terms. These positions may be illiquid and difficult to value. DIP loans may be subject to price volatility due to various factors including, but not limited to, changes in interest rates, market perception of the creditworthiness of the debtor and general market liquidity. Lender Liability and Equitable Subordination: A number of judicial decisions in the United States have upheld the right of borrowers to pursue lending institutions and others on the basis of various evolving legal theories (collectively termed “lender liability”). Generally, lender liability is founded upon the premise that a lender has violated a duty (whether implied or contractual) of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower that creates a fiduciary duty owed to the borrower or its other creditors or shareholders. Because of the nature of certain of the Private Funds’ investments, the Private Funds could be subject to allegations of lender liability. In addition, under common law principles in the United States that in some cases form the basis for lender-liability claims, if a lender (a) intentionally takes an action that results in the undercapitalization of a borrower or issuer to the detriment of other creditors of such borrower or issuer, (b) engages in other inequitable conduct to the detriment of such other creditors, (c) engages in fraud with respect to, or makes misrepresentations to, such other creditors or (d) uses its influence as a stockholder to dominate or control a borrower or issuer to the detriment of other creditors of such borrower or issuer, a court may elect to subordinate the claim of the offending lender or bondholder to the claims of the disadvantaged creditor or creditors (a remedy called “equitable subordination”). The Firm does not intend to have the Private Funds engage in conduct that would form the basis for a successful cause of action for lender liability, including the equitable subordination doctrine; however, because of the nature of the debt obligations, the Private Funds may be subject to claims from creditors of an obligor that debt obligations of such obligor which are held by the Private Funds should be equitably subordinated or that the Private Funds should otherwise be liable for claims of lender liability. With respect to the investments in a non-U.S. issuer, laws of certain non-U.S. jurisdictions may also impose liability upon lenders or bondholders under factual circumstances similar to those described above, with consequences that may or may not be analogous to those described above under U.S. federal and state laws. Sovereign and Governmental Debt: The Private Funds may invest in debt issued by governmental entities, including, without limitation, obligations issued or guaranteed by national, state or provincial governments, political subdivisions or quasigovernmental or supranational entities. Investments in the debt of governments can involve a high degree of risk. The governmental or sovereign issuer that controls the repayment of debt may not be able or willing to repay the principal and/or interest when due in accordance with the terms of such debt. An issuer’s willingness or ability to repay the principal and interest due in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole and the political constraints to which the governmental entity may be subject. Governmental entities also may be dependent on expected disbursements from other governments, multilateral agencies and others abroad to reduce the principal and interest due on their debt. Sovereign states have also increasingly intervened in the markets for their debt for a variety of economic and/or political reasons. Certain governmental and sovereign debt may have non-investment grade ratings or be in distress or even default. Synthetic and derivative investments that provide synthetic exposure to sovereign and governmental debt may expose the Private Funds to additional risks and volatility. Loans to Private Companies: The Private Funds may pursue loans to private, small and middle market companies. These loans may involve a number of particular risks that may not exist in the case of large public companies, including that: (i) these companies may have limited financial resources and may be unable to meet their obligations under the debt that the Private Funds hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of the Private Funds realizing on any guarantees the Private Funds may have obtained in connection with an investment; (ii) these companies typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns; (iii) limited public information exists about many of these companies, and the Private Funds are required to rely on the ability of the Firm’s investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies, and if the Firm is unable to uncover all material information about these companies, it may not make a fully informed investment decision, and the Private Funds may lose money on such investments; (iv) these companies are more likely to depend on the management talents and efforts of a small group of persons and, as a result, the death, disability, resignation or termination of one or more of these persons could have a negative impact on these companies’ ability to meet their obligations; (v) these companies generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence and may require substantial additional capital to support their operations finance expansion or maintain their competitive position; and (vi) these companies may have difficulty accessing the capital markets or obtaining financing to meet future capital needs, which may limit their ability to grow or to repay their outstanding indebtedness upon maturity, and may also increase the risk of their defaulting on their obligations, leaving creditors such as the Private Funds dependent on any guarantees or collateral they may have obtained. The impact of these risks on loans made by the Private Funds will be more pronounced when the loans are not secured by the company’s assets. Investments in Loans: The Private Funds may invest in loans, including real estate, consumer and commercial loans. These loans may be at the time of acquisition, or may thereafter become, sub-performing or nonperforming for various reasons. With respect to collateralized loans, the underlying asset may be too highly leveraged, poorly managed or substantially in need of rehabilitation. Nonperforming and sub-performing loans may require a substantial amount of workout negotiations or restructuring, which may entail, among other things, a substantial reduction in the interest rate and a substantial write-down of the principal of the loan. However, even if a restructuring were successfully accomplished, a risk exists that upon maturity of such loan, replacement “takeout” financing will not be available. Purchases of participations in loans raise many of the same risks as investments in loans and also carry risks of illiquidity and lack of control. It is possible that Värde may find it necessary or desirable to foreclose on collateral securing one or more loans purchased by a Private Fund. The foreclosure process can be lengthy and expensive. Borrowers often resist foreclosure actions by asserting numerous claims, counterclaims and defenses against the holder of a loan, including, without limitation, lender- liability claims and defenses, even when such assertions may have no basis in fact, in an effort to prolong the foreclosure action. In some jurisdictions, foreclosure actions can take up to several years or more to conclude. At any time during the foreclosure proceedings, the borrower may file for bankruptcy, staying the foreclosure action and further delaying the foreclosure process. Foreclosure litigation tends to create a negative public image of the collateral and may result in disruptions that could adversely affect the value of the underlying asset. The value of the loan will be adversely impacted by a decline in the value of the underlying collateral, which is likely to be beyond the control of the Private Funds. Finally, there is unlikely to be a liquid secondary market for these types of investments. Consequently, the Private Funds may not be able to dispose of these investments at prices that reflect their value or cost. Changes in the market may adversely affect the value of the collateral and thereby lower the value to be derived from a liquidation. In addition, adverse changes in the market increase the probability of default, as the incentive of the borrower to retain equity in the property declines. Risks Associated with Investments related to Bankruptcy Proceedings: The Private Funds may invest in companies that are, or become, subject to formal bankruptcy proceedings and/or informal out-of-court restructurings. There are a number of significant risks when investing in companies involved in bankruptcy proceedings or restructurings, including the following: (i) many events in a bankruptcy are the product of contested matters, adversary proceedings and negotiated settlements that are beyond the control of individual creditors; (ii) a bankruptcy filing may have adverse and permanent effects on a company (e.g., the company may lose its market position and key employees and otherwise become incapable of restoring itself as a viable entity); (iii) if the proceeding is converted to liquidation, the liquidation value of the company may not equal the liquidation value that was believed to exist at the time of the investment; (iv) the duration of a bankruptcy proceeding is difficult to predict and a creditor’s return on investments can be adversely impacted by delays while the plan of reorganization is being negotiated, approved by the creditors and confirmed by the bankruptcy court, and until it ultimately becomes effective; (v) the administrative costs in connection with a bankruptcy proceeding are frequently high and will be paid out of the debtor’s estate prior to any return to creditors; (vi) creditors can lose their ranking and priority in certain circumstances as a result of bankruptcy proceedings, including if they exercise “domination and control” over a debtor and other creditors can demonstrate that they have been harmed by such actions, especially in the case of investments made prior to the commencement of bankruptcy proceedings; (vii) the Private Funds may purchase creditor claims subsequent to the commencement of a bankruptcy case, which may be disallowed by the bankruptcy court; (viii) bankruptcy law permits the classification of “substantially similar” claims in determining the classification of claims in a reorganization; (ix) in the early stages of the bankruptcy proceeding, it is often difficult to estimate the extent of, or even to identify, any contingent claims that may be made; (x) certain claims, such as claims for taxes, may have administrative priority by law over the claims of certain creditors; (xi) if Värde seeks representation on creditors’ committees, it may owe certain obligations generally to all creditors similarly situated that the committee represents, and it may be subject to various trading or confidentiality restrictions (and since each Private Fund will indemnify any person serving on a committee on its behalf for claims arising from breaches of those obligations, indemnification payments could adversely affect the return on such Private Fund’s investment in a reorganization); (xii) litigation (including related discovery requests) can ensue among parties-in-interest to a bankruptcy (which proceedings can be expensive and their outcomes (including the loss of claims and/or priority) are inherently unpredictable); and (xiii) involvement on a creditors’ committee or other significant involvement in a bankruptcy proceeding may expose the Private Funds to material non-public information, which would restrict the Private Funds’ trading activities. Contingent Liabilities: In connection with executing an investment, a Private Fund may assume, or acquire, a financial asset subject to contingent liabilities. These liabilities may be material and may include liabilities associated with pending litigation, regulatory investigations or environmental actions, among other things. To the extent these liabilities are realized, they may materially and adversely affect the value of a financial asset. In addition, if a Private Fund has assumed or guaranteed these liabilities, the obligation would be payable from the assets of such Private Fund. In connection with the disposition or financing of an investment, a Private Fund may be required to make representations about the investment, be responsible for the contents of disclosure documents or otherwise make certain guarantees. A Private Fund may also be required to indemnify the purchasers of such investment or the underwriters or advisors involved in the transaction. These arrangements may result in the incurrence of accrued expenses, liabilities or contingencies for which reserves or escrow accounts may be established. Bankruptcy Claims: The Private Funds may invest in bankruptcy claims, which are amounts owed to creditors of companies in financial difficulty. Bankruptcy claims are generally illiquid and generally do not pay interest and there is no guarantee that the debtor will ever be able to satisfy the obligation on the bankruptcy claim. The markets in bankruptcy claims are generally not regulated. Because bankruptcy claims are frequently unsecured, holders of such claims may have a lower priority in terms of payment than certain other creditors in a bankruptcy proceeding. In addition, under certain circumstances, payments and distributions may be reclaimed if any such payment is later determined to have been a fraudulent conveyance or a preferential payment. Investments in Asset-Backed Securities: The Private Funds may invest in a variety of types of asset-backed securities (“ABS”), including (but not limited to) residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and other mortgage- backed securities (“MBS”), collateralized debt obligations (“CDOs”) and collateralized loan obligations (“CLOs”). The Private Funds may invest in any tranche of an ABS, including unrated tranches. ABS are primarily exposed to the performance and credit risk of the underlying collateral, which may include (without limitation) consumer receivables, commercial loans, investment grade credit, high-yield credit and leveraged loans. ABS can also be subject to interest rate, foreign exchange, liquidity and counterparty risk. The Firm may actively expose the Private Funds to these risks through ABS investments; however, there can be no guarantee that Värde will be successful in making the right selections. At times, there may not be a liquid secondary market for many of the ABS the Private Funds may purchase. The lack of a liquid secondary market may have an adverse effect on the market value of the related ABS and Värde’s ability to sell them. Further, ABS may be subject to certain transfer restrictions that may further restrict liquidity. Värde engages in certain activist efforts with respect to one or more ABS held by the Private Funds and will likely continue to do so going forward. These efforts include enforcing contractual rights against certain parties to the ABS, which may result in legal proceedings being brought against these parties. In addition, securitization trustees generally require indemnifications to be provided by activist ABS holders, which could increase potential liability to the Private Funds. There is no assurance as to the amount or timing of any benefits to the Private Funds that could result from these activist efforts. Risks Relating to Investments in RMBS and Residential Mortgage Loans: The Private Funds may invest in RMBS as well as pools of residential mortgage loans. Holders of these assets bear various risks, including credit, market, interest rate, structural and legal risks. RMBS represent interests in pools of residential mortgage loans secured by residential properties. Such loans may be prepaid at any time. Residential mortgage loans are obligations of the borrowers thereunder only and are not typically insured or guaranteed by any other person or entity, although such loans may be securitized and the securities issued in such securitization may be guaranteed or credit enhanced. The rate of defaults and losses on residential mortgage loans will be affected by a number of factors, including general economic conditions and those in the area where the related mortgaged property is located, the borrower’s equity in the mortgaged property and the financial circumstances of the borrower. If a residential mortgage loan is in default, foreclosure of such residential mortgage loan may be a lengthy and difficult process, and may involve significant expenses. Furthermore, the market for defaulted residential mortgage loans or foreclosed properties may be very limited. At any one time, a portfolio of RMBS may be backed by, or a pool of residential loans may be comprised of, residential mortgage loans with disproportionately large aggregate principal amounts secured by properties in only a few states or regions. As a result, the residential mortgage loans may be more susceptible to geographic risks relating to such areas (such as adverse economic conditions, adverse events affecting industries located in such areas and natural hazards affecting such areas), than would be the case for a pool of mortgage loans having more diverse property locations. In addition, the residential mortgage loans may include so- called “jumbo” mortgage loans, having original principal balances that are higher than is generally the case for residential mortgage loans. As a result, such portfolio of RMBS may experience increased losses. Certain underlying residential mortgage loans may have a balloon payment due on its maturity date. Balloon residential mortgage loans involve a greater risk to a lender than self-amortizing loans, because the ability of a borrower to pay such amount will normally depend on its ability to obtain refinancing of the related mortgage loan or sell the related mortgaged property at a price sufficient to permit the borrower to make the balloon payment. A number of factors prevailing at the time such refinancing or sale is required may affect the ability to refinance, including, without limitation, the strength of the residential real estate markets, tax laws, the financial situation and operating history of the underlying property, interest rates and general economic conditions. If the borrower is unable to make such balloon payment, the related issue of RMBS or residential mortgage pool may experience losses. Prepayments on the underlying residential mortgage loans will be influenced by the prepayment provisions of the related mortgage notes and may also be affected by a variety of economic, geographic and other factors, including the difference between the interest rates on the underlying residential mortgage loans (giving consideration to the cost of refinancing) and prevailing mortgage rates and the availability of refinancing. In general, if prevailing interest rates fall significantly below the interest rates on the related residential mortgage loans, the rate of prepayment on the underlying residential mortgage loans would be expected to increase. Conversely, if prevailing interest rates rise to a level significantly above the interest rates on the related mortgages, the rate of prepayment would be expected to decrease. Prepayments could reduce the yield received on the related issue of RMBS or residential mortgage pool. Structural and Legal Risks of RMBS and Residential Mortgage Loans: The Private Funds may invest in residential mortgage loans and RMBS. Residential mortgage loans may be subject to various U.S. federal and state laws, public policies and principles of equity that protect consumers, which among other things may regulate interest rates and other charges, require certain disclosures, require licensing of originators, servicers and/or debt buyers, prohibit discriminatory lending practices, regulate the use of consumer credit information and regulate debt collection practices. Violation of certain provisions of these laws, public policies and principles may limit the servicer’s or owner’s ability to collect all or part of the principal of or interest on a residential mortgage loan, entitle the borrower to a refund of amounts previously paid by it or subject the servicer or owner to damages and sanctions. Any such violation could also result in cash flow delays and losses on the related issue of RMBS. RMBS may have structural characteristics that distinguish them from other ABS. The rate of interest payable on RMBS may be set or effectively capped at the weighted average net coupon of the underlying mortgage loans. As a result of this cap, the return to investors is dependent on the relative timing and rate of delinquencies and prepayments of mortgage loans bearing a higher rate of interest. In general, early prepayments will have a greater impact on the yield to investors. Federal and state law may also affect the return to investors by capping the interest rates payable by certain mortgagors. The Servicemembers Civil Relief Act of 2003 provides relief for soldiers and members of the reserve called to active duty by capping the interest rates on their mortgage loans at 6% per annum. Certain RMBS may provide for the payment of only interest for a stated period of time. In addition, structural and legal risks of RMBS include the possibility that, in a bankruptcy or similar proceeding involving the originator or the servicer (often the same entity or affiliates), the assets of the issuer could be treated as never having been truly sold by the originator to the issuer and could be substantively consolidated with those of the originator, or the transfer of such assets to the issuer could be voided as a fraudulent transfer. Challenges based on such doctrines could also result in cash flow delays and losses on the related issue of RMBS. It is not expected that the RMBS will be guaranteed or insured by any governmental agency or instrumentality or by any other person, although the Private Funds may be permitted to invest in direct obligations of, or that are fully guaranteed as to principal and interest by, the United States or certain instrumentalities thereof. Distributions on RMBS and residential mortgage pools will depend solely upon the amount and timing of payments and other collections on the related underlying mortgage loans. Risks Relating to Commercial Mortgage Loans and CMBS: The Private Funds may invest in commercial mortgage loans and in CMBS and other MBS, including subordinated tranches of such securities. Commercial mortgage loans are subject to the effects of: (i) the ability of tenants to make lease payments, (ii) the ability of a property to attract and retain tenants, which may in turn be affected by local conditions such as oversupply of space or a reduction in demand for rental space in the area, the attractiveness of properties to tenants, competition from other available space and the ability of the owner to pay leasing commissions, provide adequate maintenance and insurance, pay tenant improvement costs and make other tenant concessions, (iii) interest rate levels and the availability of credit to refinance such loans at or prior to maturity, (iv) compliance with regulatory requirements and applicable laws, including environmental controls and regulations and (v) increased operating costs, including energy costs and real estate taxes. Commercial mortgage loans generally are non-recourse to borrowers and generally lack standardized terms, which may complicate their structure and increase due diligence costs. Repayment of loans secured by commercial properties often depends on the ability of the related real estate: (i) to generate income that is sufficient to pay the debt service, operating expenses and leasing commissions and to make necessary repairs, tenant improvements and capital improvements; and (ii) to retain sufficient value to permit the borrower to pay off the loan at maturity (in the case of loans that do not fully amortize over their terms). Any factor that affects the ability of the underlying real estate to generate sufficient cash flow could have a material adverse effect on the value of such loans. In addition, in the case of commercial properties that have a single user or tenant or few tenants, it may be difficult and costly to liquidate such properties or attract new tenants. Some such properties may not be readily convertible (or convertible at all) to alternative uses if those properties become unprofitable for any reason. Also, there may be costs and delays involved in enforcing rights of a property owner against tenants in default under the terms of leases with respect to commercial properties and such tenants may seek the protection of the bankruptcy laws which can result in termination of lease contracts. Income from and values of properties are also affected by such factors as the quality of the property manager, applicable laws, including, without limitation, tax laws, interest rate levels, the availability of financing for owners and tenants and the impact of and costs of compliance with environmental controls and regulations. The value of CMBS will be influenced by factors affecting the value of the underlying real estate portfolio, and by the terms and payment histories of such CMBS. Some or all of the CMBS contemplated to be acquired by the Private Funds may not be rated, or may be rated lower than investment-grade securities, by one or more nationally recognized statistical rating organizations. Lower-rated or unrated CMBS, or “B-pieces,” have speculative characteristics and can involve substantial financial risks as a result. The prices of lower credit quality securities have been found to be less sensitive to interest rate changes than more highly rated investments, but more sensitive to adverse economic or real estate market conditions or individual issuer concerns. Securities rated lower than “B” by the rating organizations can be regarded as having extremely poor prospects of ever attaining any real investment standing and may be in default. Existing credit support and the owner’s equity in the property may be insufficient to protect the Private Funds from loss. As an investor in subordinated CMBS in particular, the Private Funds will be first in line among debt holders to bear the risk of loss from delinquencies and defaults experienced on the collateral. The Private Funds may acquire subordinated tranches of CMBS issuances. In general, subordinated tranches of CMBS are entitled to receive repayment of principal only after all principal payments have been made on more senior tranches and also have subordinated rights as to receipt of interest distributions. Such subordinated tranches are subject to a greater risk of nonpayment than are senior tranches of CMBS or CMBS backed by third-party credit enhancement. In addition, an active secondary market for such subordinated securities is not as well developed as the market for certain other MBS. Accordingly, such subordinated CMBS may have limited marketability and there can be no assurance that a more efficient secondary market will develop. The value of CMBS and other MBS in which the Private Funds may invest generally will have an inverse relationship with interest rates. Accordingly, if interest rates rise, the value of such securities will decline. In addition, to the extent that the mortgage loans that underlie specific MBS can be prepaid, the value of such mortgage securities may be negatively affected by increasing prepayments, which generally occur when interest rates decline. Mortgage loans on commercial properties underlying CMBS often are structured so that a substantial portion of the loan principal is not amortized over the loan term but is payable at maturity and repayment of the loan principal, and thus, often depends upon the future availability of real estate financing from the existing or an alternative lender and/or upon the then-current value and salability of the real estate. Therefore, the unavailability of real estate financing may lead to default. Many commercial mortgage loans underlying CMBS are effectively nonrecourse obligations of the borrower, meaning that there is no recourse against the borrower's assets other than the collateral. If borrowers are not able or willing to refinance or dispose of encumbered property to pay the principal and interest owed on such mortgage loans, payments on the subordinated classes of the related CMBS are likely to be adversely affected. The ultimate extent of the loss, if any, to the subordinated classes of CMBS may only be determined after a negotiated discounted settlement, restructuring or sale of the mortgage note, or the foreclosure (or deed in lieu of foreclosure) of the mortgage encumbering the property and subsequent liquidation of the property. Foreclosure can be costly and delayed by litigation and/or bankruptcy. Factors such as the property's location, the legal status of title to the property, its physical condition and financial performance, environmental risks and governmental disclosure requirements with respect to the condition of the property may make a third party unwilling to purchase the property at a foreclosure sale or to pay a price sufficient to satisfy the obligations with respect to the related CMBS. Revenues from the assets underlying such CMBS may be retained by the borrower and the return on investment may be used to make payments to others, maintain insurance coverage, pay taxes or pay maintenance costs. Such diverted revenue is generally not recoverable without a court-appointed receiver to control collateral cash flow. Equity Securities Issued by CDOs and CLOs: A portion of the Private Funds’ assets may consist of equity securities issued by any one or more CDOs or CLOs. These equity securities are subject to substantial risks including the following: Leveraged investment: CDO or CLO equity tranches represent leveraged investments in the underlying collateral held by the CDO or CLO issuer. This leverage is designed to increase the cash flow available in respect of the amount invested by the holders as compared with the cash flow that would be available in respect of a comparable investment in a non-leveraged transaction. Such increased cash flow will directly affect the yield on the CDO or CLO equity tranches. However, the use of leverage also creates risk for the holders because the leverage increases their exposure to losses with respect to the collateral. As a result, the occurrence of defaults with respect to only a small portion of the collateral could result in the substantial or complete loss of the investment in the CDO or CLO equity tranches. Due to the existence of leverage, changes in the market value of the CDO or CLO equity tranches could be greater than the changes in the values of the underlying collateral of the relevant issuer, which itself may be subject to, among other things, credit and liquidity risk. Although the use of leverage creates an opportunity for increased returns on the CDO or CLO equity tranches, it increases substantially the likelihood that the holders of the CDO or CLO equity tranches could lose their entire investment if the pool of collateral held by such CDO or CLO entity is adversely affected. Limited sources for dividends and other distributions on CDO or CLO equity: The CDO or CLO equity tranches represent equity interests in the relevant CDO/CLO issuer only. Like other securities issued by CDOs or CLOs, they are payable solely from and to the extent of the available proceeds from the collateral held by the issuer. The CDO or CLO equity tranches are part of the issued share capital of the issuer and are not secured. Except for the issuer, no person is obligated to pay dividends or any other amounts with respect to the CDO or CLO equity tranches. Consequently, holders of the CDO or CLO equity tranches must rely solely upon distributions on the collateral. If distributions on such collateral are insufficient to pay required fees and expenses, to make payments on the debt securities of the issuer or to pay dividends or other distributions on the CDO or CLO equity tranches, all in accordance with the applicable priority of payments, no other assets of the CDO/CLO issuer or any other person will be available for the payment of the deficiency. Once all proceeds of the collateral have been applied, no funds will be available for payment of dividends or other distributions on the CDO or CLO equity tranches. Therefore, whether holders of the CDO or CLO equity tranches receive a return equivalent to the repayment of the purchase price paid for the CDO or CLO equity tranches and any additional return thereon will depend upon the aggregate amount of dividends and other distributions paid on the CDO or CLO e please register to get more info

Registered investment advisers are required to disclose all material facts regarding any material legal or disciplinary events that would be material to an evaluation of Värde or the integrity of Värde’s management. Värde does not have any material legal or disciplinary events to disclose. please register to get more info

Other Investment Advisers/Sponsors of Private Funds VMLP is the investment manager of each Private Fund. The general partner of VMLP is Värde Management, Inc., a Delaware corporation. VMLP’s direct subsidiary sub-advisers are: Värde Partners Europe Limited, Varde Partners Asia Pte. Ltd, Värde Partners Australia LLC, Varde Partners Hong Kong Limited, Varde Partners Japan and Varde India Investment Adviser Private Limited. In addition, VMLP has other subsidiaries established in certain other jurisdictions to support its operations. VMLP and its direct and indirect subsidiaries share compliance personnel, and the personnel of such other Värde entities will be subject to substantially similar compliance policies and procedures and Code of Ethics requirements as the personnel of VMLP (in addition to any other compliance requirements of applicable regulatory authorities in the their respective jurisdictions). VMLP is affiliated, and has material business relationships, with Värde Partners, L.P. (“VPLP”). VPLP is a Delaware limited partnership and serves as the direct or indirect general partner of each Private Fund. The general partner of VPLP is Värde Partners, Inc., a Delaware corporation. Please see the section titled “Performance-Based Fees and Side-By-Side Management” (Item 6 above) regarding performance-based fees that may be paid by a Private Fund to its general partner. In addition, as disclosed above, the general partner of each Private Fund is generally required to invest at least 1% in each Private Fund (other than certain co-investment vehicles). The investment advisory and fund management business operated by Värde is governed by a Partners Committee, the members of which are the Principals. The Principals are Värde’s primary investment advisory professionals. Investments in Asset Managers, Operating Platforms and Similar Entities Certain of the Private Funds have acquired, and may in the future acquire, interests in or complete ownership of one or more asset managers, operating platforms or similar entities (each, a “Platform”). These Platforms (1) provide, and may in the future provide, various services that are purchased by the Private Funds, including (without limitation) converting certain types of assets and portfolios into cash; providing collection, due diligence and underwriting services; or otherwise servicing financial assets and/or (2) originate assets that are subsequently purchased by one or more Private Funds, including commercial loans and consumer receivables. The Private Funds’ investments in Platforms have been structured to provide the Private Funds with a range of ownership interests (from minority interests to complete ownership). The board of directors (or its equivalent) of any such Platform will generally include Värde employees. Certain other control rights may also be retained by the related Private Funds to protect the investments made in or through the Platform by such Private Funds. The Platforms typically enter into servicing relationships with the Private Funds (or their investments). All such services are performed by the Platform’s personnel, not by personnel or other affiliates of Värde and Värde does not exercise day-to-day control over or management of the Platform. Other than interests held by the Private Funds, Värde itself has no ownership interests in these Platforms. Going forward, certain of the Private Funds may acquire additional interests in one or more Platforms, including majority or complete ownership. To the extent those Private Funds with an ownership interest in a Platform (1) hire such Platform to provide services and/or (2) purchase originated assets from such Platform, a proportionate share of any benefits that accrue to the Platform (including any servicing and origination fees) will also accrue to those Private Funds to the extent consistent with the terms of the Platform’s organizational documents and the relevant financial agreements between such Private Funds and the Platform. Having ownership in a Platform may, however, create the potential for certain conflicts of interest. First, there is the potential incentive for Värde to pursue unsuitable or unnecessary investments on behalf of a Private Fund in order to generate fees for the Platform and/or purchase unsuitable or unnecessary investments from a Platform on behalf of a Private Fund to generate proceeds for a Platform. These additional fees or proceeds would benefit the Private Funds that have an ownership interest in the Platform as well as indirectly benefit investors in such Private Funds (including, potentially, Värde’s affiliates and employees). As a theoretical matter, to the extent the same Private Funds that have an ownership interest in the Platform are making or purchasing the unsuitable or unnecessary asset or portfolio investments, the potential benefit to such Private Funds of the Platform’s increased financial performance often outweighs the downside risk resulting from the unnecessary or unsuitable investments. Therefore, the conflict risk is mitigated with respect to those Private Funds with an ownership interest in the Platform in such circumstances. If a situation arises in which certain Private Funds did not have an ownership interest in the Platform, but did have servicing agreements with, or purchased assets from, such Platform, the conflict relating to unsuitable or unnecessary investments is more realistic. As a practical matter, however, Värde’s suitability obligation with respect to all Private Fund investments (regardless of asset manager ownership) and its disciplined investment process mitigate any potential or actual conflict. A second potential conflict relates to a decision to hire a Platform to provide services. At least with respect to those Private Funds with an ownership interest, they have a financial interest in hiring the Platform. Theoretically, such Private Funds could retain the Platform even if it demonstrated poor performance or an inability to provide the services for which it had been retained. However, such poor performance or inability to perform would hurt the performance of the serviced assets or portfolios and so as a practical matter, such a conflict is mitigated. The same conclusion applies with respect to those conflicts that might arise were Värde to use its influence to retain such a Platform on behalf of Private Funds without any ownership interest in the Platform. In any event, given their importance, Värde monitors the performance of all Platforms and conducts periodic on-site audits to ensure compliance with performance targets and contractual obligations. Finally, conflicts could arise if a Platform owned by certain Private Funds breaches its contractual obligations, or otherwise fails to perform its responsibilities adequately, resulting in harm or damages to the Private Funds. In this type of situation with a third-party Platform, the affected Private Funds would be free to pursue appropriate remedies, up to and including litigation. Where the Platform is owned (in whole or in part) by the same Private Fund or other Private Funds advised by Värde, the affected Private Funds have a potential conflict in determining what action to take against the Platform. Värde will seek to resolve these conflicts using its best judgment considering all factors it deems relevant including the best interests of each of the affected Private Funds. In addition, Värde may request that the third-party, non- Private Fund owners of the Platform (if any) agree to indemnify and hold harmless the Private Fund owners in connection with the Platform’s performance of its obligations. Sponsors of Limited Partnerships Värde and its related entities are, directly or indirectly, the general partners, limited partners and/or managing members of the general partner of each of the Private Funds. This can create conflicts in the allocation of time, resources and investment opportunities among the Private Funds. Värde believes these conflicts of interest are mitigated by its allocation procedures. Investors are requested to refer to the Offering Documents of each Private Fund for complete information on the requisite time commitments of Värde and its related persons to the Private Funds.

Affiliate Services Värde has established affiliates to provide real estate asset management services that include due diligence, industry analysis and identification, acquisition, holding, improvement and disposition of such portfolio companies, including operational aspects of such companies, to the Private Funds and third parties. In addition, Värde has entered into a joint venture to provide services with respect to investments in stressed and distressed assets in India, and may in the future establish one or more other affiliates to provide country-specific management or service functions in one or more countries in which the Private Funds may invest. Värde, as an extension of its investment management services, may also from time to time form or acquire businesses to provide other services to the Private Funds, including providing loan origination or loan servicing, or otherwise serving as sourcing platforms for assets that may be of interest to the Private Funds. Värde and/or such affiliates may charge fees, costs or expenses for their services to the Private Funds and/or portfolio companies, and Värde and its affiliates shall be entitled to retain the economic benefit of such amounts to the extent set forth in the Private Funds’ Offering Documents. In addition, Värde and its affiliates may receive an indirect economic benefit (including, for example, creating a business with independent enterprise value) from providing such services, even in circumstances where the amounts received by Värde and its affiliates result in a management fee offset. As a result, Värde may be incentivized to favor service providers affiliated with the Firm even if a better price and/or quality of service provider could be obtained from another person or entity. Värde may also have a conflict of interest in determining the costs of such services that will be charged to the Private Funds. The conflicts of interest described above with respect to Platforms would also apply to such affiliate services.
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Trading
Code of Ethics Värde maintains a Code of Ethics (the “Code”) designed to reinforce the fiduciary principles that govern the conduct of Värde and its personnel. The Code, among other things, requires all employees to act with integrity, competence, dignity and in an ethical and professional manner. The Code requires pre-clearance of personal securities transactions involving initial public offerings, limited offerings or private placement securities, investments in current client holdings and sales involving previous client holdings, and requires reporting and review of personal securities transactions in accounts in which employees and certain family and household members have an interest. These confirmations and statements are submitted to and reviewed by the Global Chief Compliance Officer or her designee. Requests for trading authorization will be denied when, among other reasons, the proposed personal transaction would be contrary to the provisions of the Code. In addition to the pre- clearance requirements, the Code contains several provisions that subject such personnel to various trading restrictions and reporting obligations. These include disclosure of accounts in which Värde’s personnel have a beneficial interest, and disclosure of conflicts of interests by investment personnel before making a recommendation to any Private Fund concerning a security in which the investment person has an interest. Reportable transactions are reviewed for compliance with the Code. In certain situations, Värde and/or related persons of Värde may purchase interests in the same securities in which one or more Private Funds is investing or has invested or, conversely, a Private Fund may purchase interests in a security in which Värde and/or related persons of Värde are investing or have invested. Because Värde does not prohibit employees from investing in the same securities in which the Private Funds invest (unless such securities are on Värde’s restricted securities lists as discussed below, in which case no employees are allowed to transact in them), in addition to the pre-clearance described above, Värde reviews the periodic personal securities transactions and holdings reports in an effort to ensure that employees do not personally benefit from, or try to take advantage of, their knowledge of upcoming buys and sells within the Private Funds. The Code of Ethics also addresses the fiduciary duties expected of the persons subject to the Code, including gift and entertainment policies as well as charitable and political contribution policies. A copy of the Code is available to any investor or prospective investor upon request. Any partner, member, officer, director or employee of Värde who fails to comply with the Code risks sanctions up to and including dismissal and personal liability. Insider Trading Värde and its related persons may, from time to time, come into possession of material, non- public and other confidential information which, if disclosed, might affect an investor’s decision to buy, sell or hold a security. Under applicable law, Värde and its related persons are prohibited from improperly disclosing or using such information for their own benefit or for the benefit of any other person, regardless of whether the other person is a Private Fund. By reason of its responsibilities to the Private Funds and other investment activities, and notwithstanding procedural safeguards including restricted securities lists, Värde may acquire material, non-public or other confidential information that would limit its ability to direct the purchase or sale of certain investments. Moreover, Värde may be restricted from initiating transactions in certain instruments or selling certain investments, due to its possession of material, non-public or other confidential information, at a time when it would otherwise take such action. At times, Värde, in an effort to avoid investment restrictions with respect to the Private Funds, may elect not to receive information that other market participants or counterparties are eligible to receive or have received. Additional Conflicts of Interest Liquidation of Investments: One or a subset of Private Funds may invest in assets that are eligible for purchase by the other Private Funds, which raises potential conflicts. Investors should be aware of the inherent conflicts of interest that arise if a Private Fund is required or desires to liquidate an investment that is also held by one or more other Private Funds. Especially with regard to illiquid investments, the Private Fund might not be able to liquidate such investment at the time it is required or would like to do so. Alternatively, if the Private Fund is able to sell its portion of the illiquid investment, such sale might impact the value of the investment held by the other Private Funds and may be at a price and/or on other terms that are more or less favorable than the price and/or other terms received by such other Private Funds when liquidating such investments. Investments with Respect to Which Other Accounts May Benefit: Certain of the Private Funds have made, and will in the future make, investments in entities or assets in which they have already invested (e.g., an additional investment) or that are held by other Private Funds. The purchase, holding or sale of these investments may enhance profitability of such investments to the related Private Funds and therefore present conflicts of interests with respect to the investing Private Fund. Investments in Which Other Accounts have a Different Interest: Conflicts may also arise if the Private Funds invest in the same portfolio investment at different times, valuations or risk-return profiles or in different levels of an entity’s capital structure. For example, if a Private Fund is investing in debt securities, it may have an interest in restructuring these securities in a manner that another Private Fund, as an existing equity owner, may not find desirable. In addition, questions may arise as to whether payment obligations and covenants should be enforced, modified or waived, or whether debt should be refinanced. Decisions about what actions should be taken in a troubled situation, including whether or not to enforce claims, whether or not to advocate or initiate a restructuring or liquidation inside or outside of bankruptcy, and the terms of any work-out or restructuring raise conflicts of interest. A Private Fund may also participate in restructuring or recapitalization transactions (including those requiring additional investments of capital) involving companies in which other Private Funds have invested or may invest. These transactions may present conflicts of interest, including determinations of whether existing investors are being cashed out at a price that is higher or lower than market value and whether new investors are paying too high or low a price for the company or purchasing investments with terms that are more or less favorable than prevailing market terms. There can be no assurance that the return on one Private Fund’s investments will not be less than the returns obtained by other Private Funds participating in the same overall capital structure. Joint Financing: Conflicts of interest may arise in connection with entering into financing arrangements for the Private Funds. The Private Funds may obtain joint financing with respect to their investments, and as a result, one Private Fund may be compelled to bear the liabilities incurred in respect of another Private Fund. For example, if two Private Funds enter into a financing facility that is secured by investments owned by the two Private Funds, and the assets owned by one Private Fund are insufficient to satisfy the Private Fund’s obligations under the financing, the lender could, depending on the terms of the financing, look to the other Private Fund’s investments to satisfy such unsatisfied obligation. In addition, a Private Fund may guarantee a credit facility obtained for investments in which it participates with other Private Funds and may also guarantee (on a joint or several basis with such special purpose vehicles and/or other Private Funds) certain payment, indemnification and/or other obligations in connection with investment transactions. Financing arrangements and other transactional agreements entered into by the Private Funds may contain a number of common covenants that, among other things, might restrict their ability to: acquire, dispose of or market for sale assets or businesses; solicit investors or personnel from counterparties; compete with counterparties; disclose or use confidential information; incur additional indebtedness; make expenditures, distributions or capital calls; create liens on assets; enter into leases, investments or acquisitions; consent to transfers; make amendments to the governing documents; or engage in certain transactions with affiliates, and otherwise restrict activities of the Private Funds, their subsidiaries and their investments without the consent of the applicable counterparties. In addition, such a transaction may require the Private Funds, their subsidiaries and/or their investments to maintain specified financial ratios and comply with tests, including, without limitation, minimum interest coverage ratios, maximum leverage ratios, minimum net worth and minimum equity capitalization requirements. A default by one Private Fund or such Private Fund’s inability to meet such ratios or comply with such tests may limit the activities of such other Private Funds or have other adverse consequences on such other Private Funds, including triggering cross-default provisions and providing the lender with recourse against such other Private Funds and their assets. Management Conflicts with Other Accounts: The governing documents of certain Private Funds set forth procedures whereby, upon the occurrence of certain events and/or with the approval of a certain percentage of investors in such Private Funds, Värde may be removed as investment manager and/or general partner (or equivalent managing entity) for such Private Funds and replaced with a controlling entity unaffiliated with Värde and/or such Private Funds may be dissolved and proceed into liquidation. If several Private Funds jointly own investments, the removal of Värde as manager and/or general partner of some, but not all, of the Private Funds that jointly own investments (or the failure of the Private Funds to appoint a single third party as a replacement of Värde as manager and/or general partner) will present risks in the ongoing management of the jointly owned investments, including in that (i) the Private Funds may reach an impasse on a major decision that requires the approval of all parties, including with respect to the management and disposition of an investment, which would increase the risk of deadlocks and could delay the execution of the business plan for the investment or require the Private Fund to conduct the forced sale of such investment; and (ii) the general partner and/or manager of certain Private Funds would be in a position to take action contrary to the investment objectives or strategy of the general partner and/or manager of other Private Funds. Värde does not generally make investments alongside the Private Funds. As noted above, however, Värde (in its capacity as general partner) is generally required to invest at least 1% in each Private Fund (other than certain co-investment vehicles) and qualified employees of Värde are also permitted to invest in certain of the Private Funds. Additional conflicting interests can arise in connection with these investments. Fund and Portfolio Company Services: Conflicts may arise in connection with the engagement of advisors, consultants and other service providers. Certain advisors (including accountants, administrators, lenders, bankers, broker-dealers, attorneys, investment or commercial banking firms and certain other advisors and agents), consultants (including with respect to manufacturing, sales, marketing, technology, human resources, acquisition integration/rationalization and/or other operations services) and other service providers, or their affiliates, to the Private Funds or their investments may also provide goods or services to or have business, personal, financial or other relationships with Värde. Such service providers may be investors in the Private Funds, sources of investment opportunities or co-investors or counterparties therewith. These relationships may influence Värde in deciding whether to select or recommend such a service provider to perform services for the Private Funds (the cost of which will generally be borne directly or indirectly by the Private Funds). In certain circumstances, such service providers, or their affiliates, may charge different rates or have different arrangements for services provided to Värde as compared to services provided to the Private Funds, which may result in more favorable rates or arrangements than those payable by the Private Funds. The compensation of such service providers may be structured as fixed fees and/or as performance-based fees and allocations with respect to investments. Notwithstanding the foregoing, investment transactions for the Private Funds that require the use of a service provider will generally be allocated to service providers on the basis of Värde’s judgment as to best execution, as described in the section titled “Brokerage Practices” (Item 12 below). In addition, Värde may from time to time enter into business arrangements with service providers to operating companies whereby Värde will recommend the service provider to operating companies held by one or more Private Funds in circumstances deemed appropriate by Värde, and the service provider will agree to provide services to all such operating companies at a discounted rate. Although Värde does not receive a referral fee or other direct compensation in connection with such arrangements, such arrangements present a conflict of interest given the potential recommendation of a service provider that is providing other operating companies (in some cases, owned by other Private Funds) with services (at a discounted rate or otherwise). Conflicts of interest may arise because Värde personnel may serve as directors of certain companies or other legal entities in which the Private Funds have invested. In those instances where the Private Funds are not the sole owners of the applicable company or other legal entity, in addition to any fiduciary duties the Värde personnel owe to the Private Funds, as directors of companies or other legal entities, such personnel may owe certain duties to the owners of the companies or other legal entities and to persons other than the Private Funds. In general, such director positions are often important to the Private Funds’ investment strategy and may have the effect of enhancing the ability of Värde personnel to manage investments. However, such positions may place Värde personnel in a position where a decision must be made that is either not in the best interests of the Private Funds or not in the best interests of the owners of the company or other legal entity. Should such Värde personnel make a decision that is not in the best interest of the owners of a company or other legal entity to whom they owe fiduciary duties, such decision may subject Värde and the Private Funds to claims that they would not otherwise be subject to as an investor, including claims of breach of the duty of loyalty, securities claims and other director-related claims. In addition, because of the potential conflicting duties, Värde may be restricted in choosing investments for the Private Funds or be required to abstain from voting or otherwise participating in portfolio company decisions, which could negatively impact returns achieved by the Private Funds. Värde, in connection with investments by the Private Funds, may represent creditors or debtors in proceedings under Chapter 11 of the U.S. Bankruptcy Code or prior to such filings. From time to time, Värde may serve as advisor to, or a member of, creditor or equity committees. This involvement may limit or preclude the flexibility that the Private Funds may otherwise have to participate in restructurings or the Private Funds may be required to liquidate or refrain from selling any existing positions of the applicable issuer. In similarity to the potential conflicts that can arise from serving on the board of directors of a company, Värde personnel that serve as members of a bankruptcy committee may owe fiduciary or other legal duties to other stakeholders in the bankruptcy. Allocation of Expenses and Liabilities: Värde may from time to time cause Private Funds to incur expenses on a collective basis or incur (or commit to incur) liabilities and other obligations on a joint and several or cross-collateralized basis or otherwise provide direct or indirect credit support for the benefit of other Private Funds. Although Värde will attempt to allocate such expenses or the related repayment obligations or other related liabilities so that each person bears its pro rata share of the applicable expense or liability or other obligation, there can be no assurance that such expenses, repayment obligations and other related liabilities will be in all cases allocated appropriately. In connection with the business or activities of a Private Fund, Värde personnel may use private aircraft, including aircraft in which it has a proprietary interest. Värde may allocate expenses related to such use to the Private Funds as Travel-Related Expenses as described in the section titled “Fees and Compensation” (Item 5 above), it being understood that any such expenses allocated to the Private Funds in connection with travel to a specific destination shall not exceed commercial-equivalent first-class (or comparable tier) airfare to such destination. While Värde endeavors at all times to act in the best interests of the Private Funds, investors should be aware that the types of transactions described above create potential conflicts of interest with respect to Värde and the Private Funds. Värde will seek to resolve the conflicts of interest discussed above using its best judgment and in a manner that it believes to be fair and reasonable to the Private Funds in accordance with its duties as an investment adviser. Värde also believes that these conflicts of interest are mitigated by its allocation procedures and its disciplined investment process. please register to get more info

Selection Criteria for Broker-Dealers The primary selection criterion employed by Värde in connection with selecting broker-dealers is the broker-dealers’ ability to provide best execution. In assessing best execution, and its overall broker-dealer relationships, Värde considers a variety of factors including, without limitation, pricing, market/asset knowledge, market access, reliability, settlement risk, integrity/confidentiality, financial stability, infrastructure (technology/operations) and access/responsiveness. Värde generally gives primary consideration to obtaining the most favorable price and efficient execution. Värde may, however, pay a higher commission than would otherwise be necessary for a particular transaction when, in Värde’s opinion, to do so would further the goal of obtaining the best available execution on an aggregate basis for the related investment. Commissions are negotiated with the broker-dealer on the basis of the quality and quantity of execution services that the broker-dealer provides, in light of prevailing commission rates with respect to any securities transactions involving a commission payment. Värde may also use an Electronic Communications Network (“ECN”) or Alternative Trading System (“ATS”) to effect over-the-counter trades when, in Värde’s judgment, the use of an ECN or ATS may result in equal or more favorable overall executions for the transactions. Värde will pay a commission to an ECN or ATS that, when added to the price, is believed to be better than the overall execution price that might have been attained trading “net” with a market maker. Värde endeavors to be aware of current charges of eligible broker-dealers and to minimize the expense incurred for effecting portfolio transactions. Although Värde seeks competitive commission rates, it will not necessarily pay the lowest commission or commission equivalent. Transactions may involve specialized services or unique sourcing considerations on the part of the broker-dealer involved, resulting in higher commissions or their equivalents than would be the case with transactions requiring more routine services. The reasonableness of commissions is based on the broker-dealer’s ability to provide professional services, competitive commission rates and other services that will help Värde in providing investment management services to clients. The limited availability of a particular investment may also impact the selection of a broker-dealer and the related commission. Certain of the Private Funds participate in a loan that has been extended to a special purpose vehicle that is affiliated with a third party broker-dealer through which Private Fund transactions are placed. Värde believes the broker-dealer does not directly benefit financially from the loan and the special purpose vehicle does not directly benefit financially from the broker-dealer’s trading activity with the Private Funds. To the extent both the broker-dealer and the special purpose vehicle are affiliated, they may be deemed to benefit indirectly. However, the existence of the loan to the special purpose vehicle is not a factor in the selection of the broker-dealer to execute Private Fund transactions and Värde at all times seeks best execution of Private Fund transactions. Värde also specifically monitors its transactions with the broker-dealer firm in an effort to mitigate any potential conflicts of interest. From time to time, Värde’s prime broker offers it opportunities to meet with potential investors and advisory clients as part of conferences or meetings it sponsors (commonly known as capital introduction services). Värde is not charged a fee nor is it obligated to provide any other form of consideration in connection with this service, and the prime broker is not acting as a placement agent or underwriter. Värde used the prime broker for several years before considering any capital introduction opportunities and intends to continue to use the prime broker regardless of Värde’s use of such services, or their success, as long as Värde believes the prime broker is capable of providing the services necessary for Värde to fulfill Värde’s obligations to clients. As such, any capital introduction services are not a factor in our continued use of the prime broker. Soft Dollar and Directed Brokerage Policies Värde may receive proprietary research from the broker-dealers with which it does business, although Värde generally does not request such research, does not have any arrangements to “pay up” for such research and does not consider such research when directing brokerage transactions for client accounts to broker-dealers. Värde does not receive third-party research or any brokerage services (except proprietary research) paid for with client commissions. Should Värde decide to do so at some future time, Värde will adopt specific procedures for implementing any soft dollar policy. Värde also does not participate in directed brokerage commission arrangements and will not accept directed brokerage instructions from any investor. Cross Transactions, Warehousing and Principal Transactions The Private Funds may trade assets between the Private Funds. Any such cross transactions will generally be valued and priced at fair value and will be conducted on terms no less favorable to each Private Fund involved in the transaction than would be the case in a transaction with an independent third party and in accordance with any fiduciary obligation of Värde under applicable law and subject to any conditions or required consents under a participating Private Fund’s Offering Documents. Moreover, in order to facilitate an investment, certain Private Funds (the “Initial Funds”) may make (or commit to make) such investment with a view to selling a portion of such investment to other Private Funds or other parties prior to or within a brief period after the closing of the acquisition (“Warehoused Investments”), and other Private Funds (the “Acquiring Funds”) may commit to acquire such Warehoused Investments from the Initial Funds on terms set forth in the Operative Documents of such Acquiring Funds. In such event, the Initial Funds will bear the risk that any or all of the excess portion of any such Warehoused Investment may not be sold or may only be sold on unattractive terms and that, as a consequence, the Initial Funds may bear the entire portion of any breakup fee or other fees, costs and expenses related to such Warehoused Investment, hold a larger than expected portion of such Warehoused Investment or may realize lower than expected returns from such Warehoused Investments. Värde endeavors to address such risks by requiring such Warehoused Investments to be in the best interests of the Initial Funds, regardless of whether any sell-down ultimately occurs. Värde and/or certain related persons of Värde may, directly or through one or more entities, sell securities in which they have a direct or indirect ownership interest to certain Private Funds in connection with Warehoused Investments or other transactions, provided that the sale is consistent with Värde’s fiduciary obligations to the Private Funds. Such transactions will be fully disclosed and the written consent of the appropriate Private Fund (which, in certain circumstances, may be provided by the Private Fund's advisory committee) will be obtained prior to the consummation of any such transactions in accordance with Section 206(3) of the Investment Advisers Act of 1940, as amended, (to the extent such transactions constitute “principal transactions”) and all other applicable state and federal securities laws. Allocation of Investment Opportunities Värde allocates investment opportunities to each Private Fund in a manner that in its judgment it believes to be appropriate and equitable in light of the investment objectives, liquidity, diversification and other similar factors applicable to the Private Funds. As a general practice, Värde endeavors to allocate investment opportunities pro rata among each of the actively investing Private Funds (assuming the investment satisfies the objectives of each such Private Fund) based on the amount of capital each has available for investment in such investment opportunity. In certain cases, however, investment opportunities may be made available other than on a pro rata basis. In making its allocation decisions, Värde generally takes into account the following factors: (i) the investment objectives of each Private Fund; (ii) the liquidity position and anticipated liquidity needs of each participating Private Fund; (iii) the size and anticipated liquidity of the investment; (iv) diversification and/or concentration considerations; (v) maturity or duration considerations; (vi) applicable transfer or assignment provisions; (vii) the proximity of a Private Fund to the end of its investment period (if applicable); (viii) tax considerations; (ix) regulatory considerations; and (x) such other factors as Värde may reasonably deem relevant. Värde monitors allocations made on an other-than-pro rata basis in an effort to ensure that over time all Private Funds are treated fairly in light of their specific situations. Transaction Aggregation Transactions are executed by approved personnel. Generally, Värde purchases and sells the same securities for two or more Private Funds and may bunch orders where Värde deems this to be appropriate and consistent with Värde’s fiduciary duties. The decision to aggregate is only made after Värde determines that: it does not intentionally favor any Private Fund over another; it does not systematically advantage or disadvantage any Private Fund; it does not receive any additional compensation or remuneration solely as the result of the aggregation; and each participating Private Fund will receive the average investment price and will share pro rata in the transaction costs. When a bunched order is filled in its entirety, each participating Private Fund will participate at the average investment price for the bunched order on the same business day. Transaction costs generally will be shared pro rata based on each Private Fund’s participation in the bunched order. When a bunched order is only partially filled, the investments purchased generally will be allocated on a pro rata basis to each Private Fund participating in the bunched order or in such other manner that is consistent with Värde’s allocation policy. Investment and Allocation Errors Värde will evaluate any investment or allocation errors to ensure that they are corrected by the appropriate party. Värde identifies and corrects any investment and allocation error affecting any Private Fund as expeditiously as possible. As a general practice, any error that results in a gain accrues to the benefit of the Private Fund in which the error was made; any error by Värde personnel that results in a direct loss will be reimbursed by Värde to the Private Fund in which the error was made; and if more than one error is made in any given Private Fund within reasonable proximity of each other, any error resulting in a gain may be netted against any error by Värde personnel resulting in a loss within the Private Fund in determining the net loss required to be reimbursed by Värde. However, in no event will gains and losses be netted across multiple Private Funds. Any damages (net of recovery expenses) received from a counterparty in connection with any losses sustained due to counterparty errors will be for the benefit of the Private Funds. However, Värde will not be responsible for reimbursing the Private Fund for any losses sustained due to counterparty errors in the absence of recovery from the counterparty. See “Execution Risks” in the section titled “Methods of Analysis, Investment Strategies and Risk of Loss” (Item 8 above) for details on Värde’s recourse against counterparties in connection with any such errors. please register to get more info

Värde’s investment and business professionals are responsible for ongoing diligence and reviews of investments entered into on behalf of the Private Funds. These professionals review investments on a periodic basis, and in some cases as frequently as daily. Key items reviewed include comparing an investment’s actual performance versus its anticipated performance. An independent auditor annually audits each Private Fund’s financial statements. Each investor in a Private Fund generally receives in writing monthly performance return information, capital statements, a quarterly report and a copy of the quarterly unaudited and annual audited financial statements for each Private Fund in which it is invested. please register to get more info

Värde and related persons of Värde may enter into cash compensation arrangements with unaffiliated placement agents or third parties for introducing investors to a Private Fund. Any sales charge or placement fees associated with such arrangements will ultimately be payable by Värde and/or its related persons, either directly or through an offset of the management fee payable by the relevant Private Fund to Värde. Notwithstanding the foregoing, reasonable out- of-pocket expense reimbursements and indemnification payments (if any) to such placement agents or third parties may be borne by the relevant Private Funds and not by Värde. Additionally, if an investor that is placed in a Private Fund by one of the placement agents retained by Värde has a brokerage, banking or other relationship with that placement agent, that investor may pay additional fees to the placement agent based on the terms of that relationship. As noted above, Värde’s only clients are the Private Funds. In the future, to the extent Värde intends to provide cash compensation to a party for the referral of separate account clients, Värde will comply with the requirements of Rule 206(4)-3 under the Investment Advisers Act of 1940, as amended. These requirements include that the referring party be eligible to receive such compensation under the rule, the existence of a written agreement between Värde and the referring party, and the referring party’s providing the prospective clients with a separate written disclosure statement describing, among other things, that Värde will be paying the referring party and the terms of such compensation arrangement. Värde and its affiliates may provide certain real estate asset management services and country- specific management functions with respect to certain investments for compensation. See the section titled “Other Financial Industry Activities and Affiliations” (Item 10 above) for additional information about these arrangements. In addition, Värde (or persons associated with Värde) may receive a management fee and/or monitoring, consulting, directors’ or other fees (whether in cash or options or other securities) from a portfolio investment, and/or Värde may also receive commitment, structuring and/or other transaction fees from counterparties or portfolio investments in which one or more of the Private Funds invests or intends to invest. The amount of any fees that Värde or any of its associated persons receives from portfolio investments or counterparties is determined by negotiations between Värde and the applicable portfolio companies. These types of arrangements present potential conflicts of interest, including whereby Värde may be incentivized to favor itself or its affiliates to provide such services over other service providers. To help mitigate potential conflicts, the benefits received by Värde or its employees in connection with services rendered will be disclosed in the Offering Documents of the Private Funds, and in some instances such benefits will be offset in whole or substantial part against (and therefore reduce) management fees payable by the relevant Private Funds. To the extent a benefit results in a management fee offset, Värde will generally calculate the applicable offset amount for each Private Fund by allocating the corresponding benefits among the Private Funds based on the relative amounts invested or proposed to be invested in the applicable portfolio investment by each Private Fund or on such other basis as Värde may determine is equitable and appropriate under the circumstances. Notwithstanding the foregoing, investors and prospective investors should note that in the event a specific Private Fund does not charge a management fee or its Offering Documents otherwise permit, Värde and its associated persons may retain such Private Fund’s proportional share of such amounts as additional compensation (with no corresponding offset to management fees). please register to get more info

Värde does not serve as the qualified custodian of any of the assets owned by the Private Funds and does not maintain physical custody of any securities or cash owned by the Private Funds (other than certain privately offered securities to the extent permitted by the Investment Advisers Act of 1940, as amended, and related SEC interpretive guidance). However, Värde is deemed by the applicable regulatory rules to have constructive custody of the assets of each Private Fund as a result of its position as an affiliate of the general partner (or equivalent control person) of each Private Fund. Värde satisfies the applicable regulatory requirements related to custody by, among other things, ensuring that each Private Fund is subject to an annual audit by an independent accounting firm that is registered and examined by the Public Company Accounting Oversight Board, and that audited financial statements for each Private Fund are provided to its respective investors within the applicable required time frame. For these Private Funds, investors will not receive account statements from the bank or other qualified custodian holding physical custody of such Private Fund’s assets. please register to get more info

Each Private Fund retains Värde to exercise broad investment discretion in accordance with the investment objectives and investment mandates of each Private Fund without investor consultation or consent, all as set forth in the applicable Offering Documents. This authority is established through the subscription documents completed and signed by each investor as well as the management agreements between VMLP and each Private Fund. The exercise of Värde’s investment discretion includes (without limitation) the determination of:  When to buy or sell;  Which investments to buy or sell;  The total amount of investments to buy or sell;  The broker-dealer or other institution through which (or with which) investments are bought, sold or managed;  The commission rates (or other fees) at which investment transactions are effected;  The prices at which investments are to be bought or sold, which may include spreads, mark-ups, fees and transaction costs payable to one or more third parties;  The amount of research and/or due diligence that may be conducted and whether the transaction may be pursued on an expedited basis; and  How to manage the investments after acquisition, including (for example) whether to pursue an activist role with respect to any investment or whether to engage an asset manager or other third-party service provider. please register to get more info

Because Värde has the authority for investments held by the Private Funds, it has adopted written proxy voting policies and procedures. These policies and procedures generally provide that Värde will vote investments for the exclusive benefit, and in the best economic interest, of the relevant Private Funds and their beneficiaries, as determined by Värde in good faith. Värde’s voting responsibilities will be exercised in a manner that is consistent with the general anti-fraud provisions of the Investment Advisers Act of 1940, as amended, as well as with Värde’s fiduciary duties under federal and state law to act in the best interests of the Private Funds. Värde considers each issue presented in a proxy on its merits and votes on a case-by-case basis consistent with the Private Funds’ best economic interests. On occasion, Värde may determine not to vote a particular proxy. This may be done, for example where: (i) the cost of voting the proxy outweighs the potential benefit derived from voting; (ii) a proxy is received with respect to securities that have been sold before the date of the shareholder meeting and are no longer held in a client account; (iii) the terms of an applicable securities lending agreement prevent Värde from voting with respect to a loaned security; (iv) despite reasonable efforts, Värde receives proxy materials without sufficient time to reach an informed voting decision and vote the proxy; or (v) the terms of the security or any related agreement or applicable law preclude Värde from voting. It is possible Värde may have a conflict of interest in connection with voting on a particular matter. If a conflict exists that cannot be otherwise addressed, Värde may choose one of several options including: (i) voting in accordance with its standard proxy procedures, if it involves little or no discretion; (ii) voting as recommended by a third-party service, if employed by Värde; (iii) “echo” or “mirror” voting the proxies in the same proportion as the votes of other proxy holders that are not Värde clients; (iv) if possible, erecting information barriers around the person or persons making the voting decision sufficient to insulate the decision from the conflict; or (v) abstaining from voting. Investors in the Private Funds may request a copy of Värde’s written proxy voting policies and procedures as well as information about how Värde has voted securities for the Private Fund in which an investor has invested. please register to get more info

Each registered investment adviser is required to disclose whether it has any financial condition that could impair its ability to meet its contractual commitments to its clients, and whether it has been the subject of a bankruptcy proceeding. Värde does not have any adverse financial conditions to disclose and has not been the subject of a bankruptcy proceeding. please register to get more info